Centre for Advanced Financial Research and Learning (CAFRAL) released its first flagship India Finance Report 2023
Centre for Advanced Financial Research and Learning (CAFRAL) released its first flagship India Finance Report 2023. The theme of the report is “Connecting the Last Mile: Non-Banking Financial Companies (NBFCs) in India”.
NBFCs are companies registered under the Companies Act 1956 which provide bank-like financial services but do not hold banking licenses.
Key highlights of the report:
- Monetary Policy Transmission (MPT): MPT through NBFCs is strong but there is a delay of nearly two years to see its impact on their balance sheet.
- Financial Inclusion: NBFCs facilitate further deepening of financial inclusion by catering to the underserved subprime and marginalised borrowers.
♦ Over the last decade, retail lending by NBFCs has grown nearly twofold greater (223.2%) by leveraging technology. - Digital lending: NBFCs are at the forefront of digital lending. The share of digital lending to overall lending was 60.53% for NBFCs compared to a smaller 5.53% for banks in FY 2020.
- Growth trend: NBFCs in India proliferated after the global financial crisis, albeit disrupted by shocks and systemic spillovers in 2018-19 (IL&FS default).
♦ The rapid growth in the NBFC sector has been accompanied by a simultaneous decline in the share of bank credit.
About CAFRAL
CAFRAL was set up in 2006 as an independent body by RBI to promote finance, macroeconomics, and public policy
research.
The Centre for Advanced Financial Research and Learning (CAFRAL) is an independent body set up by the Reserve Bank of India (RBI) in the backdrop of India’s evolving role in the global economy, in the financial services sector and its position in various international fora. CAFRAL seeks to develop into a world class global institution for research and learning in banking and finance.